Buying a practice requires research, communication and much more. During an MDRT Podcast episode, D. Kyle Atkins, CLU, CFP, a 27-year MDRT member from Spartanburg, South Carolina, USA, and David Grau Jr., president of Succession Resource Group, talk about considering the desire of an owner who wants to sell their business but is not ready to stop being an advisor. (Listen to the full episode at mdrt.org/smoothing-out-an-acquisition.)

Atkins: The biggest thing we found — having done one acquisition and working on two others — is that we need to make sure we’re clear about what the current owners are trying to achieve. For the sellers who are out there just to get the largest amount of money, we may not be a great fit. However, if our cultures work together, and they’re looking to sail off gradually into the sunset, well that’s marvelous. But if, say, they’re going to take the check and leave the next day, we’re meeting with that owner to dig into what they want and why. We have found that discussion to be very valuable.

As David knows, these deals can get very sticky, and sometimes the seller changes their mind regarding what they want as more factors get into the mix. Opinions change, and it’s almost an emotional thing, especially for an advisor who’s been in the business for decades. Exiting is a complete lifestyle change for them, and we find it to be very hard for many advisors to just sail away.

Most of us think we’re invincible and we’re going to do this job until they take us out feet first. That sounds great, and I hope to be in this profession until they wheel me out, but the facts do not necessarily match up with the way we hope our exit will be. Getting over that emotional hurdle helps us with the sellers we’re talking to and why they want to sell. If we know the whys, we can help build the exit strategy and/or the merger strategy so everything works together.

Grau: I love your comment — when working with a seller, do what you as an advisor are already great at with your clients. Two ears, one mouth — ask questions, and then just shut up and listen. To your point, there are so many times where we’ll work with buyers who are making great offers, and you can just tell it’s not resonating with the seller because the buyer doesn’t know what the seller is looking to do post-sale. So, Kyle, let’s say you’re going to retire someday, and I want to buy your amazing business. I’d make you a great offer to buy your business, get a three-month transition choreographed, and then you can go do something else. If you as the seller don’t know what that something else is, but you like what you’re doing — you like the clients and want to maybe cut back to 10 hours per week and just have a corner office where you can come in but don’t have to — then I can make you an amazing offer. But if I didn’t ask that question to find out what you see your post-sale life looking like, it’s going to take a dozen offers before I get to something that piques your interest. It’s such an easy question to ask. You may not always be able to find a solution that meets the seller’s needs, but you definitely can’t if you don’t ask.

Atkins: Absolutely. We find that the sellers know they need to sell, but they’re also saying to themselves, “Hey, I’m 75, or 85 years old, and I want to keep doing this,” without admitting that they’re forgetting some things now, that they’re not as sharp as they were a year or two ago. They know an exit needs to happen but worry about how they can make it happen without impacting the clients.

Because the seller is always concerned about where they are going to end up, how do we make an acquisition as seamless as possible? Asking the seller what they want to do and giving them the opportunity to hang around, have an office, float in, float out, is the key. I mean, we’ll give a title. You can have any title you want. It doesn’t make any difference to us, and we’ll let your clients know that you’re not gone; you’re still advising, and if we need to ramp it up to the CEO, we can call you and get you back on the line if necessary. Most of the acquisitions we’re looking at deal with advisors who are contemplating their mortality and know that they need to sell but keep kicking the can down the road.